W-4 Forms
Decoding the W-4 Form: A Brief Overview
What Is a W-4 Form?
- Definition: IRS’s Employee’s Withholding Allowance Certificate.
- Purpose: Guides employers in federal tax withholding from employees’ paychecks.
- Useful Scenarios: Multiple jobs, self-employment, or if a spouse earns income.
W-4 Form’s Utilization:
- Tax Withholding: Ensures accurate tax withholding to avoid tax-time surprises.
- Allowances: Employees choose allowances to influence withholding amounts.
- Exemptions: Can declare exemption from withholding, sparing federal income tax deductions.
Filling Out the W-4 Form:
- Personal Information: Name, address, SSN, marital status, and name changes.
- Allowances Calculation: Personal Allowances Worksheet aids in determining allowances.
- Additional Withholding: Employees can withhold extra amounts for other income sources.
- Exempt Status: Option to declare exempt status from withholding.
Determining Allowances on W-4:
- Guidelines:
- One allowance if not claimed as a dependent.
- One allowance for various filing statuses (e.g., married, head of household).
- Additional allowances for dependents and specific tax credits.
Updating W-4 Information:
- Flexibility: Employees can submit a new W-4 anytime.
- Situations for Change: Changes in family (addition of a child), second job, marriage, divorce.
- Review Suggestion: Periodic reviews recommended by the IRS for accurate withholding.
W-4 Form Changes for 2020:
- Update Status: Similar to 2019, but changes expected for 2020.
- IRS Action: Collaborating with the U.S. Treasury Department for 2020 revisions.